Hong Kong stocks ended at a 19-month high after a choppy ride, helped by Chinese economic data showing a further improvement in non-manufacturing activity, although profit-taking pressure and concern about political tussles in the U.S. to raise the nation’s borrowing limit.

Cliff deal ignites global rally

“Regional equities are seeing a continuation of the buoyant risk environment in Asia today as investors react to the passing of the fiscal cliff deal,” said Stan Shamu, a market strategist at IG Markets.

“Although some analysts feel this is merely a relief rally as U.S. leaders kick the can down the road, so to speak, it seems to have done the job for now,” Shamu added.

South Korea’s Kospi
SEU, +0.54%
bucked the upward trend to drop 0.6% on worries a strengthened won would hurt their earnings.

Stock markets in mainland China and Japan were closed for holidays.

A sharp rally overnight in U.S. stocks helped the Dow Jones Industrial Average
DJIA, -1.11%
to its largest-ever first-session-of-the-year gain on Wednesday after the deal to avoid a large economic impact from the so-called fiscal cliff. Read about U.S. market action Wednesday.

Analysts stayed cautious about a looming political battle in Washington to increase the U.S. government’s borrowing limit, pass a federal budget and undo heavy spending cuts, which were delayed in the fiscal-cliff deal.

Dariusz Kowalczyk, a senior economist at Credit Agricole, said the jump seen across risk assets Wednesday was a “one-off response to the U.S. budget vote,” and that investor risk appetite was set “to gradually lose momentum.”

He said market activity would be limited due the holidays in China and Japan, and also ahead of the key U.S. nonfarm payrolls data for December, due out Friday.

Thursday’s gains in Asia also came as China’s official non-manufacturing Purchasing Managers’ Index rose to 56.1 in December, up from 55.6 in November, after two separate gauges of manufacturing signaled a continued improvement in activity at mainland factories. Read about China non-manufacturing PMI data.

Major movers

After gains for many commodities overnight, most of the larger Australian resource names added to their recent gains.

Chinese property developers were among the strongest performers in Hong Kong last year. Both China Resources Land and China Overseas are up more than 80% over the past 12 months, significantly higher than the near-27% gain for the Hang Seng Index.

Automobile stocks extended their losses on concern a firming South Korean won could hurt earnings, particularly at a time their Japanese rivals were expected to benefit from the yen’s steep fall in recent weeks.

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